2016 Brings Nice Surprises for Advanced Micro Devices Investors

A Sneak Preview of Advanced Micro Devices’ Journey So Far

By Paige Tanner
|
Aug 9, 2016 1:37 pm EST

AMD and the PC revolution

In this series, we’ve looked at factors that would impact Advanced Micro Devices’ (AMD) future growth. This final part of the series is dedicated to new investors and gives a snapshot of AMD’s journey so far and the business transformations the company has gone through.

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Founded in 1969, AMD started by manufacturing PC (personal computer) processors. It was Intel’s (INTC) only competitor in the PC space. The two had a strong rivalry, and many lawsuits accused each other of unfair pricing and business practices. In May 2000, AMD stock reached a high of $40 when it had a strong market share in the PC space.

The mobile revolution

While the two companies tapped the PC revolution, they missed out on the mobile revolution. Qualcomm (QCOM) took to the helm and dominated the mobile space as smartphones slowly started replacing PCs in many areas.

In 2009, AMD spun off its manufacturing arm and created Global Foundries. It started outsourcing manufacturing to the new company. However, AMD started losing market share due to delays in technology launches, and it was thus forced to lower its prices. Over the years, the company’s stock lost value and fell as low as $1.62.

AMD and the AR-VR revolution

AMD is now looking to make a comeback with the AR-VR (augmented reality–virtual reality) revolution. It has created a new division, Radeon Technologies Group, to develop low-cost VR-ready GPUs that are competitive with Nvidia’s GPUs.

According to AMD, the majority of PCs currently in use aren’t VR-ready. A consumer has to spend more than $400 on a GPU to get a VR experience. The high cost of technology makes VR unaffordable for mainstream consumers.

AMD wants to break this barrier and increase the market for VR. With this in mind, it launched its VR-ready Radeon RX 480 GPU at $199. Gaming is AMD’s first step toward VR. It intends to take VR into industries, shops, hospitals, educational institutions, and many other verticals. Intel is also looking to tap the VR market, but it’s behind AMD in terms of graphics technology.

Goldman Sachs estimates the VR market for real estate and healthcare to reach $7.7 billion by 2025. If VR becomes affordable, its adoption would grow rapidly and bring AMD back into the competition.